Prepared Remarks of Secretary Shaun Donovan at the 2010 Homes for All Conference

St. Paul RiverCentre, St. Paul, Minnesota

Monday, November 8, 2010

Thank you, Congressman Ellison -- for that very generous introduction, but most of all for your partnership.

And let me just say how lucky not only Minnesota's Fifth District is -- but how lucky we all are as housers to have Keith Ellison in the United States Congress. He is an incredible champion for the issues we care about.

Over the last 22 months, he and I have had detailed conversations about so many issues -- from protecting tenants of landlords facing foreclosure, to getting lead poisoning out of homes to, of course, transforming the way we provide rental assistance in the 21st century.

With no disrespect to any of his colleagues, when it comes to housing policy, there is no more thoughtful leader in the Congress than him.

I also want to thank Senator Franken and Dan Bartholomay, as well as Chip Halbach with Minnesota Housing Partnerships and all of you. Thank you all for your tireless efforts on behalf of Minnesota families.

It's your leadership that has made Minnesota a major innovator and leader on not only housing -- but also sustainability.

To be sure, you only need to look at this conference agenda to know that Minnesota "gets it" when it comes to sustainable communities.

That work is always important, but particularly today, with so much on the line for our families and our country.

And so, today, I'd like to discuss what the Obama Administration is doing to help you build the strong, inclusive sustainable communities Minnesota families need to succeed in the 21st century.

I want to talk about the historic affordable housing investments we've made these last 22 months.

And I want to discuss how we are changing the way we do business to get the most out of those investments -- working with you to realize your own vision for success, not the one-size-fits-all approach HUD has taken for too many years.

A Sustainable Recovery

Certainly, so much of that work began with President Obama's Recovery Act, which is investing nearly $3.4 billion in Minnesota overall.

Let's not forget that when President Obama took office two years ago, we were losing 753,000 jobs a month -- the steepest jobs decline in decades.

But that began to change with passage of the Recovery Act, which has cut taxes for 95 percent of working families, rebuilt thousands of homes, highways, and bridges, and put 3 million Americans back to work.

And while we still have a ways to go, we've now experienced ten straight months of private sector job growth.

Indeed, when President Obama signed the Recovery Act into law, he said it would do three things: create jobs, help those most harmed by economic crisis, and lay the foundation for long-term growth.

Here in Minnesota, the Recovery Act is helping you realize all three of these goals in your communities.

I saw it for myself at The Cedars in Minneapolis, where the $100 million HUD is providing Minnesota in Public Housing Capital Funds is helping create the nation's first green, culturally sensitive assisted living program.

The Recovery Act is also jumpstarting the development of 32,000 affordable homes across the nation that were stuck in the pipeline by the recession through $2.25 billion in the Tax Credit Assistance Program, which is providing over $28 million to Minnesota.

In less than 21 months, the Recovery Act has already helped renovate over 315,000 homes, with nearly 18,000 new homes under construction -- many to green standards with energy efficient improvements, saving money for residents and owners alike.

In all, nearly a third of HUD's $14 billion in Recovery Act funds can be used for "greening" America's public and assisted housing stock -- reducing energy costs, lowering greenhouse gas emissions and creating jobs.

At the same time, the Homeless Prevention and Rapid Re-Housing Program, which has provided some $22 million to Minnesota, has prevented and ended homelessness for more than 750,000 people -- and at such an important moment.

No less an authority than the U.S. Conference of Mayors reports that HPRP is "fundamentally changing" the way communities respond to homelessness at the local level -- keeping people in their homes rather than waiting for them to become homeless, and quickly returning those who do fall into homelessness to the stable, permanent housing they need.

Indeed, in many ways it was HPRP that paved the way for Opening Doors--the first ever federal strategic plan to end homeless--which I was proud to present to President Obama earlier this year -- and which wouldn't have been possible without the efforts of so many here in this room.

The most far-reaching and ambitious plan in our history to put our nation on the path toward ending all types of homelessness and the culmination of more than a decade's work in communities around the country, this plan will end chronic homelessness and homelessness among veterans in five years, while ending homelessness for families, youth, and children within a decade.

The fact is, we have now proven that we can house anyone.

Our job now is to house everyone -- to prevent and end homelessness. All homelessness.

And with this plan, we will.

Indeed, with these historic investments, a budget this year that includes full funding for the Public Housing Operating Subsidy, and a proposed budget for next year that includes, even in a very tough fiscal environment, a record number of people to be served by the Housing Choice Voucher program and a billion dollars to capitalize the National Housing Trust Fund -- it's clear:

The Federal government is back in the affordable rental housing business.

And it's about time we were.

Sustainable Communities

But as Minnesota knows as well as anyone--and as this conference recognizes--affordable rental housing is only the first step toward building sustainable communities of opportunity and hope.

That's what you're doing about a dozen blocks from here, where construction of a major light rail along University Avenue connecting Minneapolis and St. Paul has the potential to open up access to jobs and opportunity for the neighborhoods it serves.

Unlike the process that occurred 40 years ago, when an interstate was built to run directly through the Central Corridor--tearing apart neighborhoods and cutting them off from opportunity--Third Sector partners like Twin Cities LISC have worked to ensure that community stakeholders, from residents to local financial institutions, are at the table, engaged and making their voices heard.

It was that kind of holistic, community-driven model with creative, locally focused thinking from the bottom up that spurred the Obama Administration to launch our Partnership for Sustainable Communities. Uniting the efforts of HUD, the Department of Transportation and the Environmental Protection Agency, the idea behind the partnership is simple:

To boost economic development and ensure that all Americans can afford to live in communities with access to employment, schools and transportation options.

Last month, with our partners in the Department of Transportation, HUD awarded nearly $170 million in planning grants to ensure regions and communities across the country have more housing and transportation choices, more energy independence, and will be more economically competitive.

For the first time in the history of federal grant competitions, these awards were jointly reviewed and selected by all three agencies -- HUD, DOT and EPA.

This partnership isn't just about meetings and better coordination -- it's about making sure that in a tight budget environment our agencies are investing every taxpayer dime with precision.

For these funds, we were inundated with applications from 49 states, two territories and the District of Columbia -- offering bold, unique proposals to plan and build sustainably based on their own local resources, landscape, culture and ingenuity.

I'm proud that we awarded a $5 million regional planning grant to your Metropolitan Council.

Bringing together the Twin Cities, Minnesota Housing, the Counties Transit Improvement Board, Hennepin and Ramsey counties, and the McKnight Foundation, Minnesota's application had the right partners -- and the right vision for success, focusing on five major corridors to coordinate land use and development with transit investment.

Fixing our economy won't happen overnight. After all, the disconnect between the places where people live and work results from decades of poor planning and misplaced priorities. As a result, the average American now spends 52 cents of every dollar they earn on housing and transportation costs.

But by acting now, we can create good jobs today.

We can ensure parents spend less time driving and more time with their children, that more families live in safe, stable communities near good schools and jobs, and that more Minnesota businesses have access to the capital and talent they need to grow and prosper.

Above all, we can lay the foundation for sustainable economic prosperity for generations to come.

Turning a Crisis into an Opportunity

Of course, at the same time we start helping communities that share problems start sharing solutions at the regional level, you only need look at foreclosure patterns to recognize the challenges communities face at the neighborhood level.

Through three rounds, HUD has awarded over $7 billion in Neighborhood Stabilization funds to help communities struggling with concentrated foreclosures turn vacant and abandoned homes into the affordable housing families need.

But as anyone who's helping fix up REO properties and stop neighborhood decline knows, the challenge with NSP isn't just dollars -- it's the capacity of local governments and agencies devastated by budget cuts.

It's having to establish individual relationships with financial institutions and negotiate the best price one house at a time.

That's why we are providing tools to localities that help them turn a crisis into an opportunity -- so that at the same time they address pressing problems like foreclosures, they're also able to really re-imagine the future of their communities.

That's why we've encouraged NSP grantees to partner with the "Third Sector" of non-profits and Community Development Corporations -- who not only know how to solve neighborhood problems, but in many places have become our most innovative affordable housing developers and important civic institutions.

And it's why I announced in September the historic "First Look" partnership between HUD, the National Community Stabilization Trust and the nation's leading financial institutions -- helping communities across the country purchase vacant properties quickly, at a discount, and before they hit the open market.

And you only need look at a city like Minneapolis to understand just how effective this wholesale strategy can be.

Working with the Trust, Minneapolis was able to buy up 260 properties in targeted neighborhoods, which they are beginning to rehabilitate to green standards and sell to responsible homeowners through a local down payment program.

With a $5.6 million investment from the Federal government in the first round of NSP, the Twin Cities Community Land Bank leveraged an additional $30 million in resources and the partnership of for-profit developers. It was that success that led us at HUD to award the city another $20 million in the second round of NSP.

As a result, in the most heavily foreclosure impacted neighborhoods in a community like North Minneapolis, home prices are gaining and private market recovery is underway.

What makes this approach to NSP unique isn't just that we are working with different servicers or buyers -- but rather a belief that federal investments can be game-changing, market-driven and cost-effective.

Game changing in the sense that instead of just buying the next 10 or 20 distressed properties that become REO, we can help communities selectively pick the most strategically important properties.

Market oriented in the sense that instead of working with a few REO servicers, we can work with financial institutions who manage 75 percent of the nation's distressed assets.

Cost-effective in the sense that instead of using a staff intensive, one-off property acquisition approach, our partners have access to automated, state of the art mapping and property management tools -- so communities can spend less time and energy thinking about spending taxpayer dollars and more on getting the most out of them.

Now, having been a local housing official, I know all too well that "game-changing," "market-oriented," and "cost-effective" may not be terms that have normally been associated with HUD in the past.

But with new partners and new tools, we're committed to ensuring every community in America will in the years to come.

Sustainable Housing

Of course, when most people hear the term "sustainability" -- they think of environmental sustainability. But this audience knows full well that you can't have a sustainable community if you have an underlying system that promotes segregated development patterns and isolation.

By now, many of you are probably familiar with HUD's Choice Neighborhoods initiative -- which builds on and improves the legacy of HOPE VI by bringing to bear private capital and mixed-use, mixed income tools to transform not just Public Housing, but all housing in a neighborhood. Just as importantly, it will make the non-profits and the private sector who participated in HOPE VI full partners in this transformation.

But everyone in this room knows that America's public housing won't be remade with a handful of grants a year.

Right now, America's Public Housing program faces a backlog of unmet capital needs that could be as high as $30 billion.

The challenge isn't limited to public housing. Older programs that subsidize more than 45,000 units of privately owned affordable housing lack any real strategy that would keep them affordable for the years to come.

Already, our country has lost 150,000 units of public housing in the last 15 years -- 10,000 homes a year, every year for fifteen years.

That is why President Obama and I have proposed a 21st century strategy to preserve affordable housing for America's most vulnerable families that we call Transforming Rental Assistance.

I'm proud that we were able to provide an additional $4 billion in public housing capital funding as part of the Recovery Act last year.

But let's be clear: that funding at best meets a fifth of the estimated capital backlog in public housing properties. And given the size of the federal deficit and the very difficult fiscal environment that lies ahead, it's clear the Federal government will not be able to finish the job alone.

And failing to finish the job means the billions the government has invested in our public and assisted housing stock over the last seventy years will be lost forever. The programs touched by TRA house over 4 million households, nearly two thirds of which are extremely low income, and two-and-a-half million of whom are elderly or disabled.

That's why we are proposing to shift the current public housing capital and operating subsidies to a single rental subsidy stream that will attract capital from private and other public sources -- $7 billion in the first year alone and $25 billion in all.

That's $25 billion sitting on the sidelines right now that could be invested in public housing but can't be because of antiquated rules that were developed nearly a half century ago.

At the same time TRA would infuse our public housing system with the capital it needs to preserve this housing, it would also improve that system in three key ways.

The first is simplicity. Right now, HUD has thirteen different deep rental assistance programs each with its own rules, administered by three operating divisions that contract with more than 20,000 separate entities.

No one would ever intentionally set up a system this complicated.

And we've seen how this proliferation of programs and delivery systems makes your job providing housing to families easier much, much harder.

Many of our nation's public housing authorities have become real innovators and entrepreneurs. But the barriers this system throws up to using other financing streams and working with social service providers makes you do that job with one hand tied behind your back.

The time has come to make our programs easier to use -- so that our local partners can focus more on the needs of your communities and less on complying with inflexible, one-size-fits-all rules.

The time has come for the Federal government to get its house in order.

The second principle is choice. Today, too many residents of public and assisted housing can't move to a different neighborhood to find a better job or further their education because moving means giving up their subsidy. That's not right.

TRA reflects our belief that families should be able to choose where they live without fear of losing rental assistance.

The third principle is community.

Everyone in this room knows that you can't have a truly sustainable community if you have a system that promotes segregation and isolation.

But quite frankly, that's what the current system does.

And to be clear: that's not the fault of our PHAs. It's because most families live in housing that is financed, developed and managed in a way that can be integrated with the communities around them, while the two-and-a-half million poor families served by HUD's oldest programs don't.

TRA will put an end to the parallel housing system in America by encouraging a mix of uses and incomes that link public housing to investments in neighborhood schools, local businesses and other community anchors.

Just as importantly, we estimate it will create more than 300,000 jobs -- building and preserving affordable housing in the communities that need it most and providing jobs for the people who need them most.

I believe and President Obama believes we can do better.

And thank goodness that someone like Congressman Ellison does as well.

At the panel following my remarks, the Congressman and I will discuss his legislation that builds on and refines the Administration's proposal -- and says once and for all that we will do better.

Reflecting months of listening to the people who know our public housing best, he's made some very important changes to our proposal -- from iron-clad protections to maintain public ownership and requirements for properties to remain permanently affordable, to a more workable resident choice option and the strong, fair resident rights families who live in these properties deserve. And I'll be discussing them in more detail at the panel.

Over half a century ago, in 1954, the Warren Court's unanimous decision in Brown vs. Board of Education stated that "separate educational facilities are inherently unequal."

A New Era of Partnership

For me, for President Obama, and for Congressman Ellison, it all comes down to a very simple belief:

That when you choose a home, you don't just choose a home.

You also choose schools for your children and transportation to work.

You choose a community -- and the choices available in that community.

A belief that our children's futures should never be determined--or their choices limited--by the zip code they grow up in.

Like our President, I know change is never easy -- that revitalizing our nation's communities won't happen overnight. Nor will it happen because of any one policy or the work of any one agency or one party.

But working together, in common purpose--in partnership--we can tackle our toughest challenges.

We can push back on this crisis.

We can build upon the remarkable change and sense of possibility you're catalyzing in communities across the state.

And most important of all, we can create a geography of opportunity for every American -- and every family.

Ensuring we do is our goal today. Let us rise to meet it.

Thank you. Enjoy the rest of the conference -- and I hope to see you all at the panel.

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